The felonious Chelsea housing boss outran scandal and the law

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As a Middlesex County commissioner in the 1970s, Michael E. McLaughlin stymied an investigation into a job-selling scheme.

Friends call him a “warrior from the old school.” But others who watched Democratic power broker Michael E. McLaughlin at work over the last four decades, from Middlesex County commissioner to close ally of the current lieutenant governor, call him “a thug,” “a liar,” and now “a ­felon.”

The disgraced Chelsea public housing chief, 67, is a throwback to rogue politicians in the mold of the legendary James Michael Curley, who once served as Boston’s mayor from a prison cell. For them, public service was often just a game of “let’s make a deal” in which the only limit was what they could get away with.

Long before McLaughlin stood before a federal judge last Tuesday and pleaded guilty to deliberately concealing his inflated $360,000 salary at the Chelsea Housing Authority, his integrity had been questioned in one job after another and he had repeatedly avoided criminal charges despite at least five previous investigations.

McLaughlin took a star turn on Lowell’s infamous 1987 “bookie tapes,” in which he was caught on a wiretap urging a bookie with mob connections to help him win promotion to Lowell city manager by leaning on a city councilor with big gambling debts. McLaughlin had once hired the bookie’s son to provide courthouse security; now he was calling in the favor.

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But McLaughlin walked away from the scandal, unlike some other politicians, who were indicted based on the secretly recorded tapes, or the bookie, who was shot to death the next year by a mob associate. The worst McLaughlin suffered was a missed opportunity after US Senator Paul Tsongas threatened to “puke in the waste basket” if McLaughlin became Lowell city manager.

BOSTON GLOBE/FILE 1978

Michael McLaughlin at an inquiry on a Middlesex County job-selling scheme

Again and again, McLaughlin outmanuevered prosecutors and politicians who could have derailed his career. As an assistant district attorney in 1978, John F. Kerry — now the US secretary of state — investigated the Middlesex County commissioners for selling jobs, including two to relatives of Mafia members.

Investigators uncovered the scam when the commissioners’ office manager picked up a wad of cash that a cooperating witness had placed in a coffee cup to pay for a supposed job.

But McLaughlin declined to answer questions before the grand jury, citing his right to remain silent. He instructed others under investigation to do the same, according to a person with firsthand knowledge of McLaughlin’s scheme, frustrating prosecutors.

“Kerry finally got up, threw a newspaper down and said, ‘We’ll never get anything out of any of these guys,’ ” recalled this person, who asked not to be named because the grand jury operated in secret.

McLaughlin was never charged, though the office manager was convicted and given a suspended prison sentence.

Until McLaughlin’s plea agreement last week, he had never faced anything more serious than a modest fine for accepting illegal campaign contributions. Now, he is a convicted felon who has agreed to cooperate with investigators in hopes of reducing his prison time by implicating others.

McLaughlin twice declined to be interviewed for this article.

It may be a testament to McLaughlin’s charm and his hardball political skills that recurrent questions about his honesty didn’t prevent him from becoming a major player in Democratic politics, running for Congress in 1978 and playing key roles in legislative and statewide campaigns for decades.

Until news of his outsized salary broke in the Globe, McLaughlin served as an informal adviser to current Lieutenant Governor Timothy P. Murray, exchanging 193 cellphone calls with him in 2010 and 2011. Attorney General Martha Coakley is investigating whether McLaughlin served as an illegal fund-raiser for Murray, whose career has been badly damaged by the connection to McLaughlin.

Even though McLaughlin repeatedly left jobs under a cloud — Methuen eliminated the city manager’s post altogether after McLaughlin held it for almost three divisive years — he always found another one. The Chelsea Housing Authority hired him in 2000 despite warnings that he would usher in an era of corruption.

City manager Jay Ash — who had no say in hiring McLaughlin, but appointed most of the housing board that supervised McLaughlin for years — said that he had wrongly believed the housing chief was “a reformed rogue.”

Those who have followed McLaughlin’s career say Chelsea should have known better: McLaughlin’s success lay in gaining control of relatively obscure organizations where he could dole out jobs and contracts without outside interference.

And the housing authority in hard-pressed Chelsea was perfect, run by a board of commissioners that repeatedly voted McLaughlin big pay raises without knowing his actual salary and took no action as McLaughlin allegedly diverted $7 million from federal grants meant to modernize apartments.

It’s the same path he had been following since his days as a Middlesex County commissioner.

“He’s a thug,” said S. Lester Ralph, a former Somerville mayor who served with McLaughlin on the County Commission in the 1970s. “If he can do something legally, or illegally, he’ll prefer to do it illegally. Because it’s his nature.”

But it may have been McLaughlin’s chutzpah that finally did him in just a few months from his planned retirement. Asked by a Globe reporter about reports of his high salary in Chelsea, McLaughlin confirmed that he made $360,000 and that he had deliberately concealed his salary from regulators, calling it “the rebel in me.”

He boasted that he deserved the money, calling himself the Joe Montana of public housing, referring to the Hall of Fame quarterback.

But, even now, people who know McLaughlin are not yet convinced that he’s down for the count.

Guy Santagate, the outgoing Chelsea city manager who tried in vain to prevent the housing board from hiring McLaughlin in 2000, said people shouldn’t underestimate McLaughlin’s resilience.

“Last chapter for McLaughlin? I’m not so sure,” Santagate said. “This is an extremely well-connected guy. He has friends at every level. This is not some clerk who got tempted over some petty cash. This is a shrewd, cunning operative who has survived for decades.”

McLaughlin was a fresh-faced young high school teacher when he was first elected selectman in his hometown of Billerica in 1969. He was teaching in the same Billerica system where his father had been a custodian, but people knew he was going places.

John Tlumacki/Globe Staff

Michael McLaughlin stood before a federal judge last Tuesday and pleaded guilty to deliberately concealing his inflated $360,000 salary at the Chelsea Housing Authority.

“He was personable and energetic and I thought he might end up in Congress, or someplace like that,” recalled Shirley Schult, who has worked for the town since the 1960s. “I didn’t expect he’d end up like this.”

But some observers saw warning signs in McLaughlin’s ceaseless ambition.

“He wanted to be a power broker, and he always pushed things too far,” said former state Representative William G. Greene Jr. of Billerica, who served on the town Finance Committee in the 1970s. “And it finally caught up with him.”

By 1975, McLaughlin had already been investigated once — for allegedly pressuring businessmen for contributions; no charges were brought — but he was gaining political clout rapidly. Not only was he Billerica’s state legislator, he was also a Middlesex County commissioner, giving him sway over hundreds of jobs from courthouse guards to county hospital employees

Tsongas, who left the commission to run for Congress in 1974, watched in dismay as McLaughlin reversed Tsongas’s efforts to make county government less of a backwater patronage haven. By 1980, when Tsongas ally Thomas Larkin came to the commission, he found departments larded with dozens of jobs held by people who never came to work.

McLaughlin “oversaw a system of hiring that would make the state Probation Department of 2006 to 2010 appear fair and balanced,” wrote Larkin in a recent essay. “Mike was an old-style, quid-pro-quo politician. Every favor done was a favor earned.’’

McLaughlin also associated with people suspected of being involved in organized crime. He acknowedged providing a job for the son of well-known bookie Jackie McDermott — “he’s a handicapped kid,” McLaughlin explained to the Eagle Tribune newspaper in 1990. “He couldn’t get a job most people can get.” He also signed off on hiring relatives of Boston crime boss Gennaro Angiulo and another mafioso.

A former aide also said McLaughlin collected campaign donations from mobsters, sending him to a bar to pick up the cash.

Yet, neither the organized crime rumors nor the multiple investigations slowed Mc­Laughlin’s ascent, much to the alarm of would-be government reformers.

“In all my life in politics, from the Lowell City Council to the US Senate, no one worries me more than Michael Mc­Laughlin,” Tsongas told the Eagle Tribune in 1990.

But McLaughlin’s wheeler-dealer style paid off repeatedly for him, allowing him to trade for the jobs and other perks he wanted. Ralph, who served as both Somerville mayor and Middlesex County commissioner with McLaughlin, recalled that McLaughlin used the offer of a Middlesex County security job to get his job as Somerville housing director in 1979.

At the time, Ralph said, McLaughlin needed one more vote to be hired, so he proposed hiring an undecided board member as a courthouse security officer. Ralph said he refused to go along, but McLaughlin had the backing of the third county commissioner, John Danehy. Middlesex County hired the housing board member, now deceased, and he in turn voted to hire McLaughlin as Somerville housing director, records show.

Eugene Brune, Somerville mayor from 1980 to 1990, said McLaughlin looked for ways to enrich his contract as housing director, even asking Brune to appeal to the Legislature to make the Somerville housing director a lifetime position.

“I said, ‘Absolutely not. I wouldn’t care if you were my brother. I wouldn’t make the position tenured,’ ’’ recalled Brune. “He was always looking for a deal. ... I wish him nothing but bad luck.”

McLaughlin’s work as a housing director in Somerville, Lowell, and later Chelsea posed serious legal barriers to his work in politics, since housing directors are covered by the federal Hatch Act that prohibits them from most political activities. In fact, Coakley’s investigation of McLaughlin’s ties to Murray focuses on whether McLaughlin illegally engaged in fund-raising for the lieutenant governor.

But McLaughlin always seemed to find a way around the Hatch Act, say critics. In the 1980s, he ran for Middlesex County commissioner while he was Somerville housing director, temporarily stepping down to become a “consultant” — not an employee — to the housing authority, according to a county official at the time.

In 1989, McLaughlin announced he would run for Lowell city councilor, angering housing board members who said it was inappropriate and probably illegal. In the end, McLaughlin lost the race and the housing board bought out his contract a few months later.

Despite the acrimonious end of McLaughlin’s tenure in Lowell and the publicity surrounding the “bookie tapes,” he landed a job as Methuen town manager in 1990. Within weeks, as voters learned of McLaughlin’s history, residents packed a Town Council meeting to demand his resignation, prompting police to investigate McLaughlin’s background.

“You had to give him credit,” said one Methuen official, recalling the acrimonious meeting. “He stood up against the onslaught. He took insult after insult.”

McLaughlin hung onto his job — the police found no wrongdoing, noting that McLaughlin was not a target in the State Police “bookie tapes.” But he did not change his polarizing style, repeatedly ousting housing board members so that he could get rid of successive housing directors. In 1992, when the Town Council suspended McLaughlin, saying communications had broken down, he was defiant.

“I’m not a slave to a paycheck, only to my ethics,” McLaughlin told the Globe. “They can like it or get a new manager.”

Before McLaughlin left Methuen in 1993, citizens were circulating a petition to get rid of the city manager’s job altogether. Four years later, voters agreed, switching to an elected mayor.

As usual, backroom politics came into play when McLaughlin won the Chelsea housing job in 2000. Charlestown political fund-raiser Jimmy Carroll said he set up a meeting in a restaurant for McLaughlin, his longtime political ally, and Richard Voke, the powerful former Chelsea state representative. At the meeting, McLaughlin asked Voke, known as a shrewd political operator, for help landing the housing job.

“Richie said that he would see what he could do, but no promises,” recalled Carroll. “All I know is McLaughlin got the job. That’s politics.”

Voke’s protégé and former top aide, Ash, would soon become Chelsea city manager. From that time until McLaughlin’s forced resignation in 2011, McLaughlin and Ash enjoyed good relations and Ash stayed out of McLaughlin’s way.

Freed from outside scrutiny, McLaughlin more than quadrupled his salary over the decade and made his close friend and traveling companion Linda Thibodeau the second-highest paid employee at the agency. She was paid an annual $10,000 stipend for performing what Housing Authority minutes described as “added ... duties.”

In 2004, McLaughlin opened a restaurant in Malden called Roosters — in honor of Linda Thibodeau’s nickname and big hair — but, like his government work, McLaughlin’s work in the private sector raised ethical and legal questions.

For one thing, McLaughlin’s business partners got nervous that so many Chelsea Housing maintenance employees were helping to outfit the restaurant, often leaving a housing truck parked outside.

McLaughlin “told me the housing authority workers were all on a day off and smiled,” recalled Michael Sheehan, a former Malden city councilor and businessman, who pulled out of the Roosters project because of his concerns.

Once the restaurant opened — with McLaughlin listed on licensing records as manager and Thibodeau as bartender — it did not turn out to be the “nice restaurant and lounge” that the Malden licensing board expected.

Neighbors quickly began complaining about the noise and altercations between patrons spilling out onto the street. Often, a dozen motorcycles were parked outside.

The restaurant closed abruptly within a year when McLaughlin declared bankruptcy, leaving investors in the cold.

Alan Gargan said he loaned McLaughlin more than $100,000 to open Roosters, and lost it all. He said McLaughlin made a thousand promises to make payments, but instead came up with one excuse after another.

“He talked a great game, but I learned the hard way you couldn’t trust him,” Gargan said.

At the housing authority, McLaughlin seemed to do little housing work — phone records show that he worked only 15 full days at the Chelsea housing office in 2011 — allowing him to devote his time to politics, throwing his full weight behind Murray, then mayor of Worcester, as he first ran for lieutenant governor in 2006.

And the employees and contractors who formed McLaughlin’s political army knew that participation was mandatory. Attorney Walter Underhill, who received about $260,000 in legal work from the Chelsea Housing Authority under McLaughlin, complained to others that McLaughlin pressured him frequently to raise money for candidates, or to perform legal work on the side.

When Underhill was dying from pancreatic cancer in 2011, a friend said that he joked darkly that he was about to be free of McLaughlin’s demands.

“Walter said, ‘at least I won’t have to deal with’ ” McLaughlin, said the friend.

It remains unclear whether McLaughlin will go to prison. Under federal sentencing guidelines, he could face a year or more for lying about his salary to regulators, but legal observers say a lot may depend on how much he helps prosecutors implicate others. It’s also unclear what charges, if any, may come from the state investigation into McLaughlin’s political activities

Meanwhile, McLaughlin has already moved on to a new venture, running the North End Diner and Pizzeria in a Tewksbury strip mall with his son, Matthew.

But he’s already run into controversy. The landlord initiated eviction proceedings against McLaughlin, accusing him of violating his lease just days before he was scheduled to appear in Boston federal court to accept his plea deal.